Good day, everyone. Welcome to the Ceragon Networks Ltd. Second Quarter 2013 Results Conference Call. Today's call is being recorded and will be hosted by Mr. Ira Palti, President and CEO of Ceragon Networks; and Mr. Aviram Steinhart, CFO of Ceragon. Today's call will include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future and -- will be achieved, and actual results could differ materially from forecasts and estimates that are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this include the risk of significant expenses in connection with potential contingent tax liabilities associated with NERA's private operations and facilities; risks associated with unexpected changes in customer demands; risks associated with increased working capital needs; and other risks and uncertainties, which are discussed in greater detail in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as the date on which they are made, and Ceragon undertakes no commitment to revise or update any forward-looking statements in order to reflect events and circumstances after the date any such statement is made. Ceragon's public filings are available from the Securities and Exchange Commission website at www.sec.gov or may be obtained on Ceragon's website at www.ceragon.com. I would now like to turn the conference over to Ira Palti, President and CEO of Ceragon. Please go ahead, sir.

Thank you for joining us today. With me on the call is Aviram Steinhart, our CFO. We are pleased to report that we are beginning to see signs of improvement in the business environment. Revenues in Q2 were towards the upper end of our guidance. After a weak booking quarter in Q1, we were very pleased to see Q2 bookings return to levels near the average, with the book-to-bill well above 1. Operators are still proceeding cautiously due to ongoing macroeconomic uncertainty, revenue per share and the challenge of planning a smooth transition to next generation LTE networks. Within the context of a generally cautious environment, our pipeline of potential business continues to increase. We are beginning to see some encouraging signs in the form of more LTE-related projects, notably in Latin America and Asia. As we announced recently, we're partnering with the largest mobile operator in Brazil to expand and upgrade its network capacity to accommodate full LTE coverage before the Mundial -- the soccer World Cup next year. In India, while 3G deployments have been mired in regulative issues, one of the largest LTE networks has been rolled out, deploying over 10,000 links of microwave backhaul over the past 1.5 years. By addressing the needs of this operator in India, we've acquired a very strong reputation, which positions us very well for the new, highly prized greenfield LTE project in India that everyone is talking about. The new one is extremely large, several times larger than the first rollout. We are on the short list, and we believe we are well positioned to benefit from our strong reputation and long-standing presence in India to gain a significant share of this project. During the second quarter, Latin America and Africa continued to be the main drivers for our business.…

Thank you, Ira. Our second quarter revenue was $90.1 million, near the high end of our guidance and at the same level as Q1. Our GAAP gross margin was 31.7%. Non-GAAP gross margin was 32.4%, a slight improvement from Q1. The non-GAAP figure excludes $300,000 from amortization of intangible assets, $200,000 of changes in to acquisition indirect tax position and $100,000 in stock-based compensation. Second quarter GAAP operating expenses were $33.2 million. Non-GAAP operating expenses were $31.9 million, compared to $32.1 million in Q1, reflecting our continued focus on expenses control. The non-GAAP operating expenses excludes $300,000 in amortization of intangibles and $1 million of stock-based compensation. On a GAAP basis, we reported an operating loss of $4.6 million. Our non-GAAP operating losses for the second quarter was $2.8 million. Finance expenses in Q1 was $2.2 million, which includes a $900,000 currency devaluation in Argentina. We expect this to be recurring, so our assumption for quarterly finance expenses going forward is around $2 million. Tax expenses was about $700,000 in the second quarter. On a non-GAAP basis, we reported a net loss of $7.5 million or $0.20 per share. On a non-GAAP basis, we reported a net loss in Q1 of $5.7 million or $0.15 per share. The geographic breakout of revenue appears in the press release. Africa, was particularly strong increasing significantly from Q1. Latin America was down a little from the an extremely strong in Q1, but still showing very good results, while the remaining regions continue to be sluggish. We had one 10% customer from Africa this quarter, and our OEM sales accounted for 11% of total revenue in Q2. Turning to the balance sheet. Trade receivable decreased to $123 million, putting DSO at 111 days, similar to Q1. Cash flow from operations was negative by $8.8 million. And after a purchase of property and equipment, our negative cash flow in Q2 was about $40 million. We drew down on our credit facility so that the cash and cash equivalents were $49.1 million. It is important to note that as we expected, our cash flow can be erratic from quarter-to-quarter. But over time, it's similar to the size of our profit or loss. As we move toward reaching breakeven by the end of the year, we expect the loss to decline. But actual cash flow may continue to be erratic from quarter-to-quarter. We continue to have ample financing flexibility to reach breakeven. At June 13, we had unused borrowing capacity of close to $20 million, in addition to the $49 million in cash on our balance sheets. As mentioned, the improvement in booking part is encouraging, and we are expecting revenue for the third quarter to range between $88 million to $98 million. We believe gradual improvement in the second half will enable us to return to profitability in Q4. Now I return the call back to Ira.

Thank you, Aviram. We have a large and growing pipeline of potential business with some substantial interest in some new products. We are pleased to see improvement in booking that we expect to take us above our revenue breakeven point. Meanwhile, we continue to manage carefully through the short term and continue to work on penetrating the market with our new products to enhance the likelihood that 2014 will be a much better year. Thank you. And now we'll take your questions.

[Operator Instructions] Our first question comes from the line of Mike Walkley from Canaccord Genuity.

Just as you look into getting back to breakeven and longer term, can you just discuss what 90% of your business from the current customers? Are your new products driving incremental sales into your current customer base? Or are you seeing, with your new products, an expanding opportunity to penetrate new customers?

I think we have -- Mike, I think the answer to your question is both. A, we are going after current -- our current customer base with the products in solving new areas and new problems with them, and we're expanding and have incremental revenues with the current customers. In addition, and that's even more important, to really gain market share, I need to open new doors. And the new products are opening new doors in places we have not been there before. Mainly, at this point, not as revenue, but in trials and experiments and field trials and the ability to really gain additional customers within our portfolio.

Okay, great. And when you say your new products will be a material part of 2014 sales, can you put any kind of color around that? Is it you have more than 10% of sales next year? Or could it be even greater?

We believe, if I look at the whole product set by 2014, and I'm thinking the whole year will be more than 10%. We believe it will range at somewhere around the 15% to 20% for the whole year.

Okay, great. And then on your strong bookings this quarter, can -- are those with your current customers and can you give us some color on the regions you're seeing the stronger booking activity?

I think we are reporting mainly the revenues, but I think that's -- it's at the same level that we've seen. We've seen very strong bookings coming out of Latin America and Africa, with okay bookings in Europe and a little bit of weaker bookings for us, both in Asia Pacific region and in the U.S. We have not seen those 2 last regions bounce back yet.

Okay, great. One question for me just on the model, I'll pass it on. Can you go over again what you said about the financial expenses? Is it $2 million per quarter for the foreseeable future? Is that what you said we should model?

Yes. This is Aviram. $2 million going forward is the devaluation that we are facing in one of the Latin American countries.

So is that through all of next year? Does that get rid of just...

Yes, every quarter, the $2 million throughout next year.

And our next question comes from the line of Joseph Wolf from Arc (sic) [Barclays].

I have 2 questions. The first -- 2 questions, one on the bookings side. As you talk -- as you start to feel a recovery or strength in the bookings, you're dealing with some larger customers or maybe even larger contract sizes, bookings for a longer period of time, meaning, if we used to think about bookings being turning into revenues over a certain amount of time, now that's a longer period of time? Or are things relatively same length? Can you talk about how we should think about how bookings turn into revenues with the customer base and the kinds of projects you're working on?

I don't think that the booking conversion into revenues change even with lower or higher bookings. I think the patterns that we have seen that's on average, the conversion is somewhere around the 6 months, is kept there. The interesting part about some of those booking is, as people are starting slowly to ramp up again, some of them become, what I would call, urgent. They delay the bookings because of hesitation for a long time. And then they're still not going for very large project, but what they need is a little bit more urgent. I've seen a little bit more of those bookings with the customer saying, "Okay, we want it now." So -- but for a good guess, it's 2 quarters. And that's why we believe that this will have an effect over the second half. And we believe we can reach back to profitability by Q4.

Okay. And then talk -- just a second question on the profitability, on the cash and the facilities that you have. If I'm not mistaken, you talked -- there was -- if you look at the midpoint or so of the range that you gave on the guidance, that would point to a operational cash loss slightly better than this quarter. How comfortable are you with where you are with that $20 million left in the facility? Or are you still working to extend more or extend your credit lines with some of your lenders?

So as -- we need to look in 2 elements. One is the overall cash reserve that we have in the balance sheet, which is $49 million. On top of that, we have close to $20 million of unused credit facility. If we are looking on getting back to operational profitability, or net profitability toward Q4, basically, over a longer period of time, we're neutralizing the fluctuation of the working capital. Our cash generation or cash -- our cash used is -- should reflect a trend the same as our non-GAAP profit and loss. So basically, we have enough cash reserve plus -- in the balance sheet, plus cash facility to maintain throughout the period as is required.

So you don't think that you're tapping that $20 million and you think that it will be around steady? Because it seemed to me there are things that are better -- there might be the high-class problem of having to dip into your cash to fund some working capital to get stuff ready for a pickup in sales. Or is it not going to be that kind of acceleration?

I don't expect this kind of acceleration.

Our next question comes from the line of George Iwanyc from Oppenheimer. George M. Iwanyc - Oppenheimer & Co. Inc., Research Division: Did I hear it correctly that 11% of your sales were from OEMs in the quarter? And is that a number that's going to jump around a little bit as we move through this year?

Yes, I think you heard correctly. 11% was from OEM sales. We have, right now, it's going to jump -- it jumps up and down depending on projects. Also, the things we do today with the OEMs, and different OEMs, is we work with them on specific projects. And it's not that it's most of the builds are not like a ongoing blind-eye orders, but it's stuff we work with them. And this quarter, it went up because we had gone through some projects in Africa, with one of the larger OEMs supplying mainly, at this point, long haul with them. George M. Iwanyc - Oppenheimer & Co. Inc., Research Division: And as India -- if India starts to pick up, is that another area where OEM agreements could come into play and be a bigger portion -- help drive more sales there?

Yes, with one of -- again, project related, it's not overall with India, with one of the customers, we do the deals there in OEM, not with all the customers. Most of what we do in India is direct. George M. Iwanyc - Oppenheimer & Co. Inc., Research Division: Okay. And then can you just kind of give us your take on the current competitive environment, both with the integrated suppliers, as well as the merchant suppliers?

I think that the environment or competitive situation did not change. It's still tough out there. Well, if I -- I don't remember, and I've been here for a while, it's never been easy with the competition. I think in different markets, we see different competitors. We don't see everyone everywhere where we operate. And I think that the market, from a competitive environment, is tough, but stable. I think we have been seeing, for example, people sometimes ask me, "Is there a change in the number or the percentage of system deals versus what you call merchant deal, what we prefer as a specialist use, the best of breed deals. " No, that number has been relatively stable around the 50% in the market for the last few years. And in specific environment, for specific places, we see changes in the -- small changes in the competition as we go, but nothing that is significantly changed at this point. And the only other comment I'll put on that is that what we do see, that with our new products that we are changing the game plans in some places and are started seeing some of the competitors react. But all sort of things to try to soften the blow with this option that we're putting in some of the places. George M. Iwanyc - Oppenheimer & Co. Inc., Research Division: Okay. And then just one last area. From a gross margin perspective, both when you look at the tail end of this year, are we potentially getting back to a, maybe more of a mid-30% type of gross margin as sales pick up a little bit? And then, when you look at 2014, with the new products starting to contribute, are they higher margin addition at that point? Or are they kind of along the lines of traditional gross margins for you?

As you saw this quarter, we improved the gross margin toward 32%, close to 32.5%. As we reach $100 million plus on the top line, we should bring the gross margin closer to 34%. Going to next year, with the new product contributing 10% to -- between 10% to 20%, the gross margin now is higher, which we should model, building it gradually through the year to 10%, 15% to close again to the 35% gross margin toward the middle of the year.

There are no further questions. Please continue.

I'd like to thank everyone for joining us on the call. Please feel free to call us both personally, both myself and Aviram, if you have any further questions. And as the environment around us slowly improves and we launch our new products, we believe we are on the track that we want the company to be in. Thank you, everyone.